Zhejiang Shangshang Securities released research reports, stating that Li Ning (02331) had an overall decrease in unit sales in the first half of the year, with a low unit growth rate in 24Q1 and a low unit decline in 24Q2. Looking at the channel, the direct sales revenue in 24Q2 remained flat year-on-year, while the wholesale revenue saw a high unit decline, and the e-commerce revenue saw a high unit growth.
The bank stated that looking at the income statement for the first half of the year, the footwear performance was stable while the outfits were slightly fluctuating. Among them, the footwear income was 7.84 billion, up 4.4% year-on-year, the outfits income was 5.38 billion, down 4.7% year-on-year, and the equipment and accessories income was 1.13 billion, up 30.3% year-on-year. Looking at the product category, running continued to lead in terms of revenue. In terms of revenue growth rate, 24H1 running was up 25%, fitness was up 7%, basketball was down 20%, and sports lifestyle was down 7%. The three major series of running shoes (super light, red rabbit, and fly electricity) sold a total of over 5 million pairs, and the Soft series sold over 1 million pairs.
Continuing to point out, the inventory on the balance sheet for 24H1 was 2.31 billion (up 9.1% year-on-year), with channel inventory of 3.9 months, compared to 3.6 months at the end of 23. In terms of inventory age structure, new products below 6 months accounted for 83%, 7-12 months accounted for 12%, and over 12 months accounted for 5%. The accounts receivable for 24H1 were 1.21 billion (up 0.9% year-on-year), and the operating cash flow was 2.73 billion (+40.6%). With strong cash flow support, the company is expected to distribute RMB 0.976 billion in cash dividends for the mid-term, with a dividend rate of 50%, compared to 45% in the same period last year.
The bank predicts that the company's revenue for 24/25/26 will be 27.9/29.6/31.3 billion yuan, up 1.2%/5.9%/5.7% year-on-year, and the net profit attributable to shareholders will be 3.22/3.5/3.76 billion yuan, up 1%/9%/8% year-on-year, corresponding to the current PE ratios of 10/9/8X. The company is still one of the most promising mass sports brands in terms of brand awareness, product reputation, and performance growth in the medium to long term. We look forward to the energy of brand growth gradually recovering after healthy inventory and the development of innovative niche categories such as outdoor and women's sports, and maintain a "buy" rating.